Three more indictments have been handed down in property flipping case involving a wide ranging ring, including several mortgage brokers, and costing lenders more than $16 million in Massachusetts.
Ten men who allegedly were in on the scheme were indicted by a federal grand jury last year, among them mortgage brokers, a lawyer, appraisers, property investors and straw buyers, according to court records.
Named in the new 69-count indictment, which includes the original charges against those indicted last year, were Lawrence Lynch, 53, owner of Affordable Mortgage in Wilbraham, Mass.; Edgar Corona, an alleged coconspirator who was involved in the buying and selling the flipped property; and Kathryn Zepka, 57, a mortgage broker for Metro Mortgage Inc., who allegedly assisted others in the ring by securing mortgage loans.
All three have pleaded innocent and were released on bail, court records show.
According to the indictment, the defendants “devised a scheme…(to) defraud money from various lending institutions by means of false and fraudulent pretenses, representations and promises” and used phony “loan applications, employment documents, down payment documents, second mortgages, HUD Settlement Statements and other real estate closing documents.”
Others indicted were mortgage brokers Mark McCarthy, 41, who worked at Ivy Mortgage; Theodore Jarrett, a former branch manager of Equicredit Corp. mortgage brokerage; Michael Bergdoll, 40, a real estate investor and developer; Anthony Matos, 33, a property broker; Pasquale Romeo, 66, the owner of Tiffy Corp., a real estate investment firm; Wilfred Changasie, 50, who helped recruit buyers; James Smith, 27, the former owner of Springfield Mortgage; Joseph Sullivan, 28, an appraiser; Jonathan Frederick, 43, also an appraiser; and Albert Innarelli, 47, a lawyer who has been disbarred.
The ring operated from 1995 through the spring of May 2002, prosecutors said.
Bergdoll, Romeo, Matos and others would buy “distressed properties typically located within low-income neighborhoods” and then quickly sell the properties to straw buyers known as “runners,” according to the indictment.
“The defendants and other coconspirators commonly used individuals known as ‘runners’ to recruit prospective buyers and paid finders’ fees averaging approximately $2,000 to such individuals for the successful sale of property,” the indictment said.
They struck up business relationships with others — mortgage brokers, appraisers, and real estate investors — that were in a position to secure mortgage loans using phony documents and bogus information on loan applications, prosecutors said.
“For example,” the indictment said, “the defendants…generated false and fraudulent documentation that made it appear as if the prospective buyers made down payments that were never really made.”
The mortgage brokers created “bogus” second mortgages to help secure the loans; the appraisers “created false and fraudulent appraisals to support the loan amounts for the artificially inflated property values,” according to the indictment.
Kickbacks were paid to them for their participation in the scheme, prosecutors allege.
The indictment lists dozens of transactions for various amounts, including $66,400; $73,140, $58,400; $75,715; and $61,025.
Prosecutors are seeking jail time and restitution as well as forfeiture of property.
